recent results and outlook · 2020. 10. 29. · 02 crisis management and strategy announced in h1...

RECENT RESULTSAND OUTLOOK

01 NINE-MONTH SALES AND OUTLOOK

02 CRISIS MANAGEMENT AND STRATEGY

ANNOUNCED IN H1 2020

03 H1 2020 RESULTS

2

41 761

9M-2019sales

Exchangerates

Structure Price Volumes 9M-2020sales

32,471 27,891

+0.6%

-7.2% like-for-like

Group -14.1% actual

€m €m

Exchange rates: depreciation of Brazilian

real, other emerging country currencies

and Norwegian krone

Structure: divestments in the context of

« Transform & Grow » and acquisition of

Continental Building Products

-4.8%

-7.8%

-2.1%

3

41 761

Q3-2019 sales Exchangerates

Structure Price Volumes Q3-2020 sales

10,794 10,127

+0.9%

+3.2% like-for-like

Group -6.2%actual

€m €m

Exchange rates: depreciation of

Brazilian real, other emerging country

currencies, US dollar and Norwegian

krone


« Transform & Grow » and acquisition of


-5.7%

-3.7%

4

+2.3%

+0.6% +0.2%

+0.9%

-5.5%

-19.4%

+2.3%

Q1-2020/ Q2-2020/ Q3-2020/Q1-2019 Q2-2019 Q3-2019

Volumes Prices

+3.2%

-4.9%

-19.2%

After hitting a low in April at 60% of 2019

levels, Group sales rallied steadily,

returning to normal levels in most countries

in the third quarter

Prices up 0.9% in a slightly deflationary

environment for industrial businesses

5

13.0% 7.4%

Q3-2019sales

Exchangerates

Structure Price Volumes Q3-2020sales

Sales in Q3 (€m)

-5.4%

+0.2%

1,859 1,678

-4.6%like-for-like

-9.7%actual

Mobility (7%): -3.3%Other industries (9%): -5.5%

o/w*:

-4.8%

6

13.0%

9M-2019sales

Exchangerates


Sales at end of September (€m)

-2.5%

+0.4%

5,721 4,780

-13.6%like-for-like

-16.4%actual


o/w*:

-0.3%

-14.0%

+0.3%

* Sales by segment: as a % of Group total and like-for-like growth

Q3-2019sales

Exchangerates


-1.4%

4,029 3,403

-15.5%actual

+0.3%like-for-like

Sales in Q3 (€m)

Nordics (13%): +0.5%UK (10%): -0.1%Germany (3%): -1.8%

o/w*:

-14.4% -0.2%

+0.5%

7

9M-2019sales

Exchangerates


-1.5%

11,755 9,493

-19.2%actual

-5.3%like-for-like

Sales at end of September (€m)


o/w*:

-12.4%

-5.5%

+0.2%

* Sales by country: as a % of Group total and like-for-like growth

Q3-2019sales

Exchangerates


-0.7% +1.0%

3,230 3,318

+2.7%actual

+7.4%like-for-like

France (25%): +8.7%Spain-Italy (4%): +3.6%

o/w*:

-4.0%

8

9M-2019sales

Exchangerates


-0.3% +1.0%

10,241 8,986

-12.3%actual

-8.6%like-for-like

France (24%): -8.6%Spain-Italy (4%): -11.5%

o/w*:

-3.4%

-9.6%

Sales in Q3 (€m) Sales at end of September (€m)

+6.4%

* Sales by country: as a % of Group total and like-for-like growth

Q3-2019sales

Exchangerates


+8.2%

1,459 1,553

+6.4%actual

+11.4%like-for-like

o/w*:

North America (11%): +5.3%Latin America (4%): +25.2%

-13.2%

9

+3.1%

9M-2019sales

Exchangerates


+7.0%

-1.2%

4,233 4,223

-0.2%actual

-0.3%like-for-like

o/w*:

North America (11%): -1.7%Latin America (4%): +3.0%

-6.9%

+0.9%


+8.3%

* Sales by sub-region: as a % of Group total and like-for-like growth

Q3-2019sales

Exchangerates


493 404

-18.1%actual

-9.2%

-3.6%like-for-like

-5.3%

-1.3%-2.3%

10

9M-2019sales

Exchangerates


1,388 1,059

-23.7%actual

-9.1%

-12.5%like-for-like

-2.1%

-1.3%

-11.2%


11

Q3-2019sales

Exchangerates


-0.7%

+1.2%

4,857 4,361

-10.2%actual

+5.3%like-for-like

-14.8%

9M-2019sales

Exchangerates


-0.9%

+0.9%

14,675 11,919

-18.8%actual

-6.0%like-for-like

-11.9%

-6.9%


+4.1%

12

Ensure the health and safety of all in a health environment which remains very challenging

Enhance the Group’s profitable and sustainable growth profile

Continue to implement operational measures to optimize earnings and the operating margin

Increase free cash flow generation

Maintain a strong balance sheet

Unlock sales synergies made possible by the new organisation under “Transform & Grow”

Continue to optimize the price-cost spread

Reduce costs in the context of additional post-coronavirus adaptation measures: €200m in full-year savings by 2021, including €50m in H2 2020

Additional “Transform & Grow” cost savings: €130m in 2020, including €50m in H2 2020, enabling the Group to meet its €250 million target a year earlier than planned

Continue the operational excellence program aimed at offsetting wage inflation and other fixed costs: €300m in 2020, including €155m in H1 2020

Continuation of its portfolio optimization as part of “Transform & Grow”

Strategy of differentiation and innovation with enhanced data, digital and customer productivity, as well as new services to adapt our solutions to the needs of the post-coronavirus world

Comprehensive portfolio of green solutions produced or distributed by Saint-Gobain

Reducing capital expenditure by more than €500 million in 2020 versus 2019

Continuing to optimize working capital requirement

Based on our sales and results growth in the third quarter, the Group now expects a like-for-like increase in operating income for the

second half 2020 compared to second-half 2019, excluding a major new impact from the recent health situation deterioration

13

In fourth-quarter 2020, amid a lack of visibility as to the impact of the coronavirus pandemic:• Saint-Gobain should benefit from ongoing favorable trends on most of its markets, particularly renovation,

which accounts for around half of the Group’s sales and is a market on which the Group is strategically very well positioned

• The catch-up effect reported in certain countries in the third quarter should however diminish• The Group remains cautious as to the outlook for the UK ahead of Brexit, and for industrial markets,

which are expected to remain down on 2019

In terms of profitability, the price increases implemented in the summer should result in an ongoing positive price-cost spread; the adaptation measures taken in the automotive segment in Europe and in the UK are progressing smoothly

14

The Group’s extensive exposure to the renovation market means it is ideally placed to benefit from national and European stimulus plans focused on the energy transition which should support Saint-Gobain’s structural growth

Saint-Gobain’s medium and long-term outlook is robust thanks to its successful strategic and organizational choices: sustainability – thanks to our solutions to protect our planet while offering comfort and wellbeing – and enhanced customer performance. This strategy is perfectly in tune with the Group’s purpose:




03 H1 2020 RESULTS

15

H1 2020 RESULTS PRESENTATION

Protect the health

of our teams

Preserve

liquidity

and financial

strength

Accelerate

cost savings

Make the

most of

the recovery

2 3 41

16


Proactive and highly committed teams

to manage the crisis according to local health environment

to share best practices and mutualize needs

at the heart of the recovery

17


Secure liquidity

• Daily tracking of cash flows

• Optimized working capital

• Selective reduction in investments

Strengthen our balance sheet

• €1.5bn bond issued March 26, in addition to a

new syndicated credit line arranged on March 23

• Disposal of Sika stake: €2.4bn

• Sharp decrease in net debt: -€3bn

A stronger financial position

18


Agile response to the crisis

T&G Savings

€250m achieved one year earlier

Additional adaptation savings

€200m in full-year 2021

• €80m at end-June 2020

• 2020 target raised to €130m

• Reduction in discretionary spending: €65m

• Net impact of partial unemployment: €95m

• Additional savings: €200m in full-year savings by 2021, of which €50m in H2 2020

35

80

85

50

€120m€130m

+€250m

H2

H1

2019 2020

95

50

65

Discretionary savings

Partial unemployment savings

net of additional costs

Post-coronavirus savings

€160m

€50m

H1-2020 H2-2020

19


Divestments AcquisitionsIntegration of Continental Building Products

• Management and teams successfully integrated

• Synergies revised upwards for 2020 (>US$ 15m)

• Value creation confirmed in Year 3 despite the coronavirus impact

in Q2 2020

Sales (US$m) EBITDA incl. synergies (US$m and %)

505

240

2019 2020*

12525%

5021%

2019 2020*

>110• Gradual re-start of divestment

processes put on hold during the crisis

* 2020 estimated over 12 months (consolidated over 11 months as from February).

20


By accelerating on digital By preserving skills

• Acceleration in omnichannel sales

• Thousands of customers joining our webinars

• Agile service and inventory management to aid a dynamic recovery

• Launch of innovative products

By optimizing customer service

>100% activity in June

Growth in sales and operating income**

• Continuity of local customer relations

• Industrial excellence throughout the recovery

+0%

+5%

+10%

Jan. Feb. March April May June

Outperformance vs marketExample of 3 distribution brands

in France*

* Growth outperforming the market (12 rolling months)** Like-for-like21

22

-40%decline in FDI*


58% think that

construction will

be more digital**

30%of the EU Recovery

Plan dedicated to

climate action

POST-PANDEMIC WORLD

** % of European building material manufacturers. Source: The impact of COVID-19 on Construction, USP

* Foreign Direct Investments in 2020. Source: UNCTAD, June 2020

More local More digital More sustainable


90% of new managers trained

to “Adhere, Comply and Act”

TRAR* of 2.2 en 2019 -14.5% CO2 emissions in 2019

(vs 2010)**

79% employees

trained in 2019

24.2% women executives worldwide 8.5m tons of natural

raw materials avoided

NET-ZERO CARBON

BY 2050

23* Total Recordable Accident Rate

(employees, temporary workers and permanent subcontractors)** At iso-production


+20% energy efficiency

+10% thermal insulation

+10% solar gain

-40% CO2 emissions

thanks to energy savings

30% heating savings

Gain of up to 3 energy classes

No interior surface lost

Thermally insulating glazing

for greater autonomy of electric vehicles

+30km autonomy

* Estimation

** In 201924

Sales for the renovation market*

Growth in electric vehicle mobility**

Sales contributing directly or indirectly to lower CO2

emissions


18 jobscreated for every €1m invested

in energy-efficient renovation

Source: BPIE

€185bnAnnual investment needs

in energy-efficient renovation

72% Share of buildings in Europe

to be renovated by 2050

€600bnspent annually in the EU

on renovation(excluding UK)

Energy-efficient renovation:

Job creation, economic recovery and sustainability

Source: European Commission, June 2020Source: internal estimateSource: Euroconstruct, Oxford Economics, EECFA, internal estimate

25


100% solutions manufactured or distributed by Saint-Gobain

* Calculations for a single-family house built between 1948 and 1974 based on the French report to the European Commission:

“Reports on the long-term strategy for France to mobilize investment in the renovation of private and public residential and commercial buildings in the national building stock”

Energy-efficient renovation

of a single-family house in FranceAdvantages*

€2,600 yearly energy expense

€320-88 %

Class GEPA1

Class C+4

classes

Class DGHG2

Class A+3

classes

1 Energy performance analysis

2 Greenhouse gas emissions

12

43

5

1Mechanical ventilation

External thermal insulation

composite systems (ETICS)

Glass wool

Double-glazed windows

Heat pump

Thermodynamic boiler

Water radiators with

thermostatic valves

2

3

4

5

26


02 CRISIS MANAGEMENT STRATEGY


03 H1 2020 RESULTS

A. GROUP

B. SEGMENTS

27

Sales€17.8bn -18.1% -12.3%

Actual Operating income

€827m -49.5% -49.2%

Actual

Operating margin: 4.7%, -290bps

Recurring net income€272m

Actual

Net debt

€9,841m

EPS: €0.51, -70.7%

EBITDA€1,635m -32.4%

2.4xEBITDA

Like-for-like Like-for-like

-71.2%

EBITDA margin: 9.2%, -200bps

H1 2020 RESULTS PRESENTATION28 /

First-half sales down 12.3% like-for-like

Operating income of €827m, down 49.2% like-for-like, resulting in a decline in the operating margin

from 7.6% to 4.7%

Growth in like-for-like sales and operating income in June

Agility in managing the crisis thanks to the new “Transform & Grow” organization

Clear-cut action on costs with savings of €395 million in the first half

Sharp 143% rise in free cash flow generation with a conversion ratio of 129%

Disposal of Sika shares for €2.4bn, generating a cash gain of €1.5bn

Sharp reduction in net debt, to €9.8bn at end-June 2020 from €12.8bn at end-June 2019


41 761

H1-2019 sales Exchangerates

Structure Price Volumes H1-2020 sales

21,677 17,764

+0.4%

-12.3% like-for-like

Group -18.1% actual

(€m) (€m)

Exchange rates: depreciation of Nordic

krona, Brazilian real and other emerging

country currencies


“Transform & Grow” and acquisition of


-4.5%

-12.7%

-1.3%


+0.6% +0.2%

+0.4%-5.5%

-19.4%

+3.3%

Q1-2020/ Q2-2020/ June-2020/Q1-2019 Q2-2019 June-2019

Volumes Prices

+3.7%

Volumes affected by the coronavirus

pandemic, with very different situations from

one country and market to the next

Clear improvement in June, up 3.7%,

benefiting from a positive calendar effect of

two days at Group level

Prices held firm in a slightly deflationary

environment

-4.9%

-19.2%

31 /H1 2020 RESULTS PRESENTATION

32 /

1,638

827

H1-2019 H1-2020

7.6% 4.7%

-49.5%actual

Margin held firm for 75% of consolidated sales

Positive price/cost spread: ~+€50m

Reduction in discretionary spending and partial employment

measures: ~+€160m

Net recurring cost savings from “Transform & Grow”: ~+€80m

~+€155m operational excellence savings to offset wage inflation

and other fixed costs


33 /

€mH1-2019 H1-2020

H1-2020/H1-2019

Operating income 1,638 827 -49.5%

Non-operating costs (168) (142)

Disposal gains (losses) (16) (22)

Asset write-downs and other (201) (712)

Business income (loss) 1,253 (49)

%

Operating income 1,638 827 -49.5%

Operating depreciation and amortization 947 950

Non-operating costs (168) (142)

EBITDA 2,417 1,635 -32.4%

EBITDA margin (as a % of sales) 11.2% 9.2% -2.0 pts


€mH1-2019 H1-2020

H1-2020/H1-2019

Business income (loss) 1,253 (49)

Net financial expense (250) (234)

Average cost of gross debt (at June 30) 2.2% 2.0%

Sika dividends 28 34

Income tax (318) (183)

Net attributable income (loss) 689 (434)

Recurring net income 944 272 -71.2%

Recurring EPS (€) 1.74 0.51 -70.7%

34 /H1 2020 RESULTS PRESENTATION

35 /

1,299

1,678

+1,088(234)

(183)

(292)

2020EBITDA*

Finance costsexcl. Sikadividends

Tax Capital expenditureexcl. additional

capacity**

Change in WCRover a 12-month

period

Free cash flow

H1 2019: €2,077m €690m

FCF conversion: 129%

FCF conversion: 33%

+143%

* EBITDA less depreciation of right-of-use assets: €1,635m - €336m = €1,299m (versus €2,077m in H1 2019)

** Capital expenditure = €447m, including €155m in additional capacity investments linked to organic growth


36 /

* EBITDA over a 12-month period

** Before IFRS 16: estimates

12.8

9.8

18.5 18.2

06-2019 06-2020

Before IFRS 16** After IFRS 16

9.8

6.7

18.7 18.4

06-2019 06-2020

Net debt

Shareholders’ equity

Net debt/shareholders’ equity 52% 36% 69% 54%

Net debt / EBITDA* 2.4 2.0 2.6 2.4





03 H1 2020 RESULTS

A. GROUP

B. SEGMENTS

37

502

231

H1-2019 H1-2020

13.0% 7.4%

H1-2019sales

Exchangerates

Structure Price Volumes H1-2020sales

-1.1%

+0.5%

3,862 3,102

-18.0%like-for-like

-19.7%actual


o/w*:

-0.6%

-18.5%

Operating income (€m)

and margin (%)

Sales (€m)

* Sales by segment: as a % of Group total and like-for-like growth H1 2020 RESULTS PRESENTATION38

460

256

H1-2019 H1-2020

6.0% 4.2%

H1-2019sales

Exchangerates


-1.6%

7,726 6,090

-21.2%actual

-8.2%like-for-like


o/w*:

-11.4%

-8.2%

+0.0%


and margin (%)

Sales (€m)

* Sales by country: as a % of Group total and like-for-like growth H1 2020 RESULTS PRESENTATION39

350

99

H1-2019 H1-2020

5.0% 1.7%

H1-2019sales

Exchangerates


-0.1%

+0.9%

7,011 5,668

-19.2%actual

-16.0%like-for-like

France (23%): -16.5%Spain-Italy (4%): -18.8%

o/w*:

-3.1%

-16.9%


and margin (%)

Sales (€m)

* Sales by country: as a % of Group total and like-for-like growth H1 2020 RESULTS PRESENTATION40

250

190

H1-2019 H1-2020

9.0% 7.1%

H1-2019sales

Exchangerates


+6.4%

-6.3%

2,774 2,670

-3.7%actual

-6.5%like-for-like

o/w*:

North America (11%): -5.5%Latin America (4%): -8.7%

-3.6%

-0.2%


and margin (%)

Sales (€m)

* Sales by sub-region: as a % of Group total and like-for-like growth H1 2020 RESULTS PRESENTATION41

85

46

H1-2019 H1-2020

9.5% 7.0%

H1-2019sales

Exchangerates


895 655

-26.8%actual

-9.0%

-17.5%like-for-like

-0.3%

-1.3%

-16.2%


and margin (%)

Sales (€m)

H1 2020 RESULTS PRESENTATION42

43 /

This presentation contains forward-looking statements with respect to Saint-Gobain’s financial condition, results,business, strategy, plans and outlook. Forward-looking statements are generally identified by the use of the words"expect", "anticipate", "believe", "intend", "estimate", "plan" and similar expressions. Although Saint-Gobainbelieves that the expectations reflected in such forward-looking statements are based on reasonable assumptionsas at the time of publishing this document, investors are cautioned that these statements are not guarantees of itsfuture performance. Actual results may differ materially from the forward-looking statements as a result of anumber of known and unknown risks, uncertainties and other factors, many of which are difficult to predict and aregenerally beyond the control of Saint-Gobain, including but not limited to the risks described in Saint-Gobain’sregistration document available on its website (www.saint-gobain.com) and the main risks and uncertainties for thesecond-half 2020, presented within the half-year 2020 financial report. Accordingly, readers of this document arecautioned against relying on these forward-looking statements. These forward-looking statements are made as ofthe date of this document. Saint-Gobain disclaims any intention or obligation to complete, update or revise theseforward-looking statements, whether as a result of new information, future events or otherwise. This presentationdoes not constitute any offer to purchase or exchange, nor any solicitation of an offer to sell or exchange securitiesof Saint-Gobain. No representation or warranty, express or implied, is made by Saint-Gobain or its managers,corporate officers, employees, contractors, representatives or advisors as to the accuracy or completeness of theinformation or opinions contained in this presentation.


RECENT RESULTSAND OUTLOOK

45 /

21%

26%30%

16%

7%

28%

31%

12%

23%

6%

Breakdown of H1 2020 Operating income

Industrial assetsat June 30, 2020

HPS

NorthernEurope

Americas

Southern Europe -ME & Africa

Asia-Pacific

HPS

Northern Europe

Americas

Southern Europe - ME

& Africa

Asia-Pacific


46 /

25%

40%

19%

16% France

OtherWestern Europe

North America

Asia & emergingcountries

Breakdown of H1 2020 Sales


47 /

35

50

30

35

50

30

20

H1-2019 H2-2019 H1-2020 H2-2020

€120m€115m

€135m

€35m

€85m

€250m+€130m



349

137

H1-2019 H1-2020

3.6% 1.8%

H1-2019sales

Exchangerates


-1.1%

+0.8%

9,817 7,558

-23.0%actual

-11.4%like-for-like

-10.5%

-12.2%


and margin (%)

Sales (€m)

48

1%

1%

1%

6%

8%

7%

5%

21%

7%

3%

21%

5%

1%

9%

2%

1%

1%RENOVATION / INFRAST.

53%**

NEW RESIDENTIALCONSTRUCTION

22%

MOBILITY

6%

OTHER INDUSTRIES

8%

NEW NON-RESIDENTIALCONSTRUCTION

11%

HPS

17%

NORTHERN

EUROPE

33%

SOUTHERN

EUROPE -

ME & AFRICA

31%

ASIA-PACIFIC

4%

49 /

AMERICAS

15%* Saint-Gobain estimated end markets** Renovation: 47%

Infrastructure: 6%


recent results and outlook · 2020. 10. 29. · 02 crisis management and strategy announced in h1...

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